Ahead of Market: 12 things that will decide stock action on Monday

NEW DELHI: Nifty50 on Friday closed at a fresh record high and formed a bullish candle on both daily and weekly charts. Analysts said investors should make use of any dips to buy into the market as the index is likely to soon hit the 16,800-900 zone.

Here's how analysts read the market pulse:-
Gaurav Ratnaparkhi, Head of Technical Research at Sharekhan, said the index is headed towards the 16,800 level. "The level of 16,800, which was our medium-term target earlier, now becomes the short-term target and the medium-term target has been raised to 17,500. Thus, the short-term traders are recommended to hold on to their long positions and ride the trend for higher targets," he said.

Santosh Meena of Swastika Investmart said Nifty50 is resuming its bullish momentum after some consolidation and may head towards 16,900 if the immediate hurdle of 16,650 is breached. "Immediate support for the index has shifted higher to 16,350-16,300 levels. The 16,200-16,150 range remains a critical support zone," he said.

That said, here’s a look at what some of the key indicators are suggesting for Monday's action:

US shares close at record highs
The Dow Industrial and S&P 500 edged up to closing records on Friday and notched a second straight week of gains, buoyed by a climb in Walt Disney shares, but a sharp drop in consumer sentiment kept gains in check. The Dow Jones Industrial Average rose 15.53 points, or 0.04%, to 35,515.38, the S&P 500 gained 7.17 points, or 0.16%, to 4,468 and the Nasdaq Composite added 6.64 points, or 0.04%, to 14,822.90.

European shares log fourth week of gains
European stocks scaled new highs on Friday and clocked their fourth consecutive week of gains on optimism over a strong earnings season and steady recovery from the pandemic-led economic downturn. The pan-European STOXX 600 index inched up 0.2% to a record high of 476.16, for the tenth straight session. The index has now matched its best winning streak since December 2006.

Tech View: Nifty sends out 'buy' signal on weekly MACD
After taking out the resistance at 16,350 level the previous day, NSE barometer Nifty50 on Friday took out the 16,500 level, forming a bullish candle on both daily and weekly scales. This was the fifth straight day when the index logged gains. Analysts said the index has sent out a 'buy' signal on the weekly momentum indicator, but at the same time, it is also hovering in the overbought territory in the lower time frame charts. They advised investors to buy into any decline as they see Nifty50 hitting the 16,800-900 zone sooner than later.

F&O: Lower volatility shows bulls still in control
India VIX moved up 5.01 per cent from 12.37 to 12.99 level. VIX moved up even after the market rise as Call writers got trapped. Higher Call IV was the reason for overall jump in volatility. Overall comparative lower volatility indicated that the bulls are holding the command and the momentum could continue. Options data suggested a broader trading range between 16,250 and 16,750 levels, while an immediate trading range was seen between 16,350 and 16,700 levels.

Stocks showing bullish bias
Momentum indicator Moving Average Convergence Divergence (MACD) showed bullish trade setup on the counters of ITC, Jindal Steel & Power, Star Cement, Wipro, Tata Consumer Product, Allcargo Logistics, Bharat Petroleum, Trident, Titagarh Wagons, Max Ventures, NHPC, Bharat Forge, United Spirits, InterGlobe Aviation, Kellton Tech Solution, Shriram City Union, TD Power Systems, Radico Khaitan, Polycab India, Punjab Chemicals, Shree Pushkar Chemicals, The Investment Trust, Technocraft Industries, Williamson Magor, ABB India, Ruchi Soya Industries, Bajaj Holdings, Responsive Industries, Spandana Sphoorty, Mold-Tek Packaging, Mazda, Solar Industries, Blue Dart Express, Praxis Home Retail, Honda India Power, Nxtdigital and JSW Holdings.

The MACD is known for signalling trend reversals in traded securities or indices. When the MACD crosses above the signal line, it gives a bullish signal, indicating that the price of the security may see an upward movement and vice versa.

Stocks signalling weakness ahead
The MACD showed bearish signs on the counters of Ashok Leyland, Sanghi Industries, Godrej Industries, Man Infraconstruction, Gujarat Sidhee Cement, UTI AMC, Intrasoft Technologies, Shanthi Gears, Ester India, SRF, Dr. Lal Pathlabs, Maral Overseas, Venus Remedies, TPL Plastech, TCI, Nagreeka Exports and Bharat Bijlee. Bearish crossover on the MACD on these counters indicated that they have just begun their downward journey.

Most active stocks in value terms
Tata Steel (Rs 4157.70 crore), Aurobindo Pharma (Rs 1592.01 crore), TCS (Rs 1500.61 crore), Bharti Airtel (Rs 1310.40 crore), HDFC Bank (Rs 1267.23 crore), RIL (Rs 1257.80 crore), Tata Motors (Rs 1074.65 crore), Eicher Motors (Rs 1057.79 crore), SAIL (Rs 973.39 crore) and Infosys (Rs 958.53 crore) were among the most active stocks on Dalal Street in value terms. Higher activity on a counter in value terms can help identify the counters with highest trading turnovers in the day.

Most active stocks in volume terms
Vodafone Idea (Shares traded: 18.48 crore), YES Bank (Shares traded: 7.86 crore), SAIL (Shares traded: 7.31 crore), JP Power (Shares traded: 6.20 crore), NALCO (Shares traded: 3.94 crore), Ashok Leyland (Shares traded: 3.65 crore), Tata Motors (Shares traded: 3.49 crore), Zomato (Shares traded: 3.37 crore), PNB (Shares traded: 3.14 crore) and Vakrangee (Shares traded: 3.06 crore) were among the most traded stocks in the session.

Stocks showing buying interest
Shriram City Union, Laxmi Organic Industries, KPIT Tech, Allcargo Logistics and Jubilant Ingrevia witnessed strong buying interest from market participants as they scaled their fresh 52-week highs, signalling bullish sentiment.

Stocks seeing selling pressure
Chaman Lal Setia Exports, Gulf Oil Lubricants India, Suryoday Small Finance Bank, Future Market Networks and YES Bank witnessed strong selling pressure and hit their 52-week lows, signalling bearish sentiment on these counters.

Sentiment meter favours bears
Overall, the market breadth remained in favour of the bears. As many as 232 stocks on the BSE500 index settled the day in the green, while 262 settled the day in the red.

Podcast: Should you book some profits in the market?
Markets are trading at record levels. Should investors consider booking some profits in the market? After briefly touching the 16,500 mark, where will Nifty head now? What do the technical charts suggest?